How to start a business in Los Angeles (2019 Guide)

HOW DO I START A BUSINESS IN LOS ANGELES?

Have you considered what it would be like to start a business in Los Angeles but are unsure where to begin?

Without the proper knowledge, this can be an exhausting process.

This blog post should be a good launchpad to understanding the process of how to Start a business in Los Angeles.

Let’s dive in.

Start a business in Los Angeles

1. DECIDE ON A BUSINESS NAME

Now that you have decided to start a business in Los Angeles, you’ll need to decide on a name. While you may have the perfect business name in mind, there are a few important things to remember when finalizing it.

A few tips to keep in mind:

  • Ensure the name is unique and catchy
  • Conduct due diligence to make sure your business name is not in violation of any trademark or other intellectual property rights
  • Check with your local, state, and federal regulations to verify your business name is available and compliant
  • Be cautious of using specific terminology that might pose your business as a credit risk

2. FILE A FICTITIOUS BUSINESS NAME (FBN) FOR YOUR LOS ANGELES BUSINESS 

Here in Los Angeles, a Fictitious Business name is not required in all situations, however, it may be a good idea depending on the nature of your business. Below are some resources to assist with searching and filing for one.

  1. Conducting a business name search.
  2. File for a fictitious business name in person by mail (you can find the application here.)
  3. Publish your fictitious business name. (Under California Law (B&P Code 17917),  within thirty days of registering your fictitious business name you must publish notice of your intent to use the business name for four weeks.)
  4. If your name is unique, consider looking into protecting it. 

Tip: Search for an expiring domain name. If you’re starting a new business, like a dental practice, you might be able to get a leg up on your SEO efforts by buying an already registered but expiring domain name. These expired domain names can give you an instant SEO boost if that site was registered years ago (Google trusts older sites more than newer sites). But only do this if it’s a domain name that:

  • You actually want to own and use for your business
  • Has SEO “juice” behind it  — look for older domains that are already ranking well in Google searches
  • Might become valuable in the future due to increased demand

3. DETERMINE YOUR BUSINESS ADDRESS

It is important to remember that regardless of where you will be operating your business (i.e. from an office, your home, online, etc.), you will need to state a physical business address.

You may be subject to certain zoning and/or licensing requirements based on the location of your stated business address.

4. SELECT A BUSINESS ENTITY FOR YOUR BUSINESS 

No two businesses are exactly the same. Based on the structure of your business, the type of entity you choose will be determined by a number of factors. It may also be wise to reach out to an experienced business attorney or business consultant.

The following breakdown should give you a better idea of which entity suits you best.

Sole Proprietorship

This type of entity is best for someone who does not want to spend the money on running the business as a separate entity. The major drawback to this type of entity is that the owners will be personally liable for any claims against the business. The benefit is that it is inexpensive to set up and there is no business maintenance.

General Partnership

Similar to a sole proprietorship, a General Partnership does not require corporate formalities. A general partnership has two or more owners and every owner shares unlimited personal liability. General Partnerships should be entered into with caution and the advice of an attorney.

Limited Partnership

In this entity, two types of partners can exist – general partner (bears unlimited liability for all liabilities of the business) and limited partner (liable for only what they have invested in the company). A limited partnership should be registered with the California Secretary of State in order to limit liability to the partners.

Limited Liability Company (LLC)

This entity is usually the most appealing to new business owners. An LLC provides limited liability for the owners without requiring corporate formalities. Each owner of the LLC is only liable for the amount of their investment in the business. However, certain industries, such as dentists, attorneys, accounts, physicians, veterinarians (to name a few) are not permitted to use an LLC for their business.

Corporations

A corporation is a type of entity that offers limited liability to its owners. One drawback of a corporation is that requires the owners (shareholders) to follow annual corporate formalities. By default, corporations are treated as C Corporations by the IRS however Corporations may elect to be treated as an S Corporation for tax benefits.

S Corporation

In this type of corporation, the profits and losses flow through the shareholders while still affording protections to shareholders from being personally liable for the entity’s debts. Additionally, LLC’s may elect to be treated as an S Corporation in order to have the relaxed formalities of an LLC and the tax benefits of an S corporation.

C Corporation

Much like the S corporation, this entity protects shareholders from personal liability, so long as the corporate formalities are met. One disadvantage is that this type of entity is subject to double taxation.

Professional Corporation

In California, certain industries (doctors, lawyers, and dentists to name a few) require a professional corporation rather than a traditional entity that other businesses might form.

This should be discussed at greater length with your business law attorney.

5. REGISTER YOUR BUSINESS WITH THE SECRETARY OF STATE

Once you have determined which type of entity is appropriate for your business, you may need to register your business with the Secretary of State. It is highly advised to have a Los Angeles business law attorney handle these matters to ensure accuracy.

6. DRAFT YOUR OPERATING AGREEMENT, PARTNERSHIP AGREEMENT OR BYLAWS

As mentioned above, depending on the type of entity you are forming, an operating agreement, partnership agreement, and bylaws may be required. For an LLC, an operating agreement will need to be drafted but bylaws are not required. For a corporation, bylaws are necessary to lay out how the business is operated and establish legitimacy to outside investors and third parties.

7. OBTAIN AN EIN (EMPLOYER IDENTIFICATION NUMBER)

For anyone who desires to set up a business an EIN  (also known as a Tax Identification Number) is required in order to open up a bank account. This can easily be accomplished through the IRS’s website. Even for individuals who set up a sole proprietorship, an EIN is highly recommended to avoid having to use your social security number in its stead.

8. APPLY FOR LICENSES AND PERMITS TO OPERATE YOUR BUSINESS

You are almost there!

The last step to your grand opening for business is to apply for the necessary local, state, and federal licenses and permits to operate your business. Included in this registration are the owners of the businesses, locations, and other names used for the business. Obtain a registered agent if you have a corporation, LLC, LLP, or any other registered entity.  You should check with the County of Los Angeles to verify if any other permits or licenses are required.

Contact a local Business Attorney to help you start a business in Los Angeles

I hope you found this helpful and we would love to assist you when you are ready to start a business in Los Angeles. If you have any questions one of our experienced Business Attorneys. In addition, we can also act as an outsourced general business counsel. Feel free to reach out to us anytime.

In addition, we offer both in-person estate planning and virtual estate planning. Contact us to learn more.

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